Cuts could put $7 billion at stake

Republicans have been celebrating across the state all week. So now comes the hangover, and it's likely to be a whopper.

For the state's most vulnerable citizens, that is - for the poor, the disabled, little children.

The new Legislature - jammed with Republicans, Republicans and, yes, more Republicans - will return to the Capitol in January, faced with cutting more than $800 million in state spending this year and another $1.4 billion next year.

They won't be talking about a trim here and a tuck there. They'll be talking about the wholesale, full-scale elimination of core programs. They'll be talking about tossing hundreds of thousands of people, if not more, off the state's health-care rolls and never mind if it means Arizona loses $7 billion in federal Medicaid funding.

"We are at a point where we are going to have to make fundamental decisions about what state government can afford," House Speaker Kirk Adams told me this week.

Adams offered a sobering assessment of what lies ahead. If you cut all of state government with the exception of prisons, the Department of Economic Security, public education, universities and AHCCCS, you would save only $820 million.

Either the state has to find more money - not a chance given the results of Tuesday's election - or a lot of people are about to get hurt.

Look for all eyes to quickly land on the DES and the Arizona Health Care Cost Containment System, where any cuts to eligibility would run afoul of the new federal health-care law and result in the loss of $7 billion in federal funds.

Earlier this year, the Legislature voted to remove 350,000 adults and children from AHCCCS but quickly backtracked when state leaders realized what was at stake. Now, some seem to be warming to the idea of kissing that $7 billion goodbye.

As our new Senate president, Russell Pearce, so astutely put it this week: "If we're saving (state) money, the fact we lose some federal money means nothing. If you can't afford Dillard's, even though they're having a great sale, you can't afford Dillard's."

I don't know whether we can afford Dillard's - or even the Dollar Store at this point. But I do wonder whether we can afford to forgo $7 billion. People will still get sick and somebody's going to pick up the tab when they do. Seven-billion dollars helps pay the tab and it provides a job or two as well.

But Adams told me that might be something the state has to risk if the feds won't ease up.

In 2000, Arizona voters approved Proposition 204, dramatically increasing the number of people eligible for the state's health-care plan for the poor. Today, 1.3 million Arizonans are on AHCCCS. That is one in five residents.

That, Adams said, is unsustainable.

"We simply do not have a way to pay for the full cost of that mandate right now . . . ," he said, acknowledging that it could mean the loss of $7 billion. "Maybe the federal government would be willing to work with us on that."

And if not?

Arizona could, he said, return to the days when it didn't have a Medicaid program and instead offered a much narrower indigent-care system, funded by the state - something he called "a very, very worse-case scenario."

Speaking of scenarios, education and the DES will also be on the block, but I didn't get the sense that there was any interest in cutting prisons, another of the big-ticket items. And Adams said you can forget about any serious proposal to raise revenue. Tuesday's results, and the margin of Republican victory in some Democratic districts, ensured that.

"There's a very strong signal sent in those votes about how they want us to deal with those issues," he said. "I believe they want state government to live within the revenues that it has in the same way they're required to do that. Now, when you get to the details, when you get to the specifics, it always becomes more difficult."

Not too difficult, I wouldn't think. Democrats are now an endangered species at the Capitol. Meanwhile, the Children's Action Alliance and the Arizona School Boards Association neutered themselves when they helped bankroll the campaign to save First Things First.

"Tell the politicians in the state Legislature to stop spending and balance Arizona's budget," they said, in one of their no-on-302 mailers.